On 16th March 2010 the Grand Chamber of the European Court of Human Rights delivered its judgment in Carson & Ors. –v- the United Kingdom (Application No.42184/05). This is the end of Mrs Carson’s long road in challenging UK state pension policy.

Mrs Carson emigrated to South Africa and subsequently retired there. She had previously worked in the UK and made full contributions to the UK state pension. Indeed she continued to make such contributions on leaving. However when her state pension came into payment, it was not index-linked – it was frozen and would not be uprated to reflect the effect of inflation. The UK does not index-link state pensions paid in South Africa. The question for the Grand Chamber was whether this policy unlawfully discriminated against Mrs Carson on the basis of her place of residence, in breach of Article 14 in conjunction with Article 1 Protocol 1.

In Mrs Carson’s domestic challenge, the House of Lords had found that a difference in treatment between residents and non-residents did not require justification, since a non-resident was in a materially different position to a resident,R (ex parte Carson) –v- Secretary of State for Work and Pensions[2005] UKHL 37. There was no direct comparison between the two classes of person and therefore the Article 14 equal treatment guarantee did not apply.

So Mrs Carson took the matter to Strasbourg. The ECtHR accepted that residence was an aspect of personal status and therefore Article 14 could apply. That said, the fact that it was a status capable of change – the pensioners could move country – led the Court to adopt a less stringent approach. They agreed with the domestic decision in finding that those pensioners resident outside the UK were not comparable to those resident within it. They were less sure as to whether Mrs Carson was in an analogous situation to other pensioners who were resident outside the UK yet who benefited from uprating of their pensions as a result of a reciprocal agreements between their country and the UK. It was Mrs Carson’s case that this disparity highlighted how arbitrary and therefore unjustified the distinction drawn was. Even supposing Mrs Carson was in a comparable position to a pensioner in a country with a reciprocal agreement, the ECtHR found any differentiation to be justified. This was on the ground that member states enjoy a very wide margin of appreciation as to whether to enter into reciprocal arrangements with certain states but not others.

Mrs Carson then turned to the Grand Chamber, which dealt with the matter under comparability. They rejected the argument that the fact Mrs Carson had paid national insurance contributions placed her in a “relevantly similar” position to other pensioners. They agreed with the domestic finding that there was no exclusive link between national insurance contributions and state pension. They went on to hold that as the UK welfare system was primarily designed to serve the needs of UK residents, it was hard to draw a comparison with pensioners living elsewhere. Nor were such pensioners in a comparable position to residents in countries with which the UK had agreed bilateral treaties. As the applicant pensioners were not in an analogous situation with those whose pensions were index-linked, no discrimination fell to be justified.

From a policy perspective, the decision in Carson is probably unsurprising. Had the Court found otherwise, they would have effectively required a member state to extend a benefit conferred by social security bilateral treaties to countries not party to those treaties.

It is worth noting that a joint dissenting opinion of six criticised the majority approach for using Mrs Carson’s status (residence) as a reason for finding no comparability. Yet given the structure in issue – the UK social security scheme – Mrs Carson’s residence abroad would have been a material consideration whether the matter was decided under comparability or justification. In certain cases it may well be circular and even invidious to use status to justify differential treatment – but this does not appear to me to be such a case.

The applicants argued that country of residence comes under ‘other status’ for the purposes of Article 14 of the Convention on Human Rights, and the Court agreed. So country of residence can be the basis for a claim of discrimination in the Court’s view.

The verdict of the Court was surprising in view of the 16 to 1 decision in favour of the applicant in the Andrejeva v Latvia case, also before the Grand Chamber on 18th February 2009. In this case the Court found that the applicant had been discriminated against on the basis of her nationality in seeking a pension for a period of employment in the former USSR – she did not have Latvian citizenship.

In Andrejeva the Court ruled that the Latvian State undertook to secure rights and freedoms under the Convention for everyone within its jurisdiction. The Court went on to say the Latvian State cannot be absolved from its responsibility under Article 14 of the Convention on the ground that it did not have a bi-lateral agreement with, in this case, the Ukraine and Russia.

In Andrejeva the Court also ruled that, although a State doesn’t have to set up a pension scheme, but when it does, it must do so in a manner compatible with Article 14. Moreover “the individual rights and interests deriving from it fall within the ambit of that provision, irrespective of the payment of contributions and the means by which the pension scheme is funded.”

The strongly worded dissenting opinion from six of the judges appears to concur with the decisions the Court had previously arrived at in Andrejeva.